Utah And 6 Other States Get Feds' OK To Run Insurance Exchanges

Utah got the go-ahead to run its own insurance exchange, but the federal blessing may not last.

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Originally published on January 3, 2013 3:39 pm

In a surprise, the Obama administration said Thursday that it has given Utah a conditional OK to run its own health insurance marketplace.

Utah Gov. Gary Herbert, a Republican, has resisted making major changes to the state's existing marketplace, which was built before passage of the federal health law and is geared to small business.

"Generally, I would prefer a state-based approach if I were to have the flexibility to stay true to Utah principles," Herbert wrote Health and Human Services Secretary Kathleen Sebelius last month asking for approval.

Acknowledging that Utah's exchange was "atypical," Herbert suggested it serve as "the minimum standard for all federally compliant exchanges."

Today, the feds announced that Utah was one of seven states to gain conditional approval.

What happened? Did they cave on some of the law's standards to placate a Republican governor?

Well, not exactly. At news conference, HHS officials said Utah would still have to meet all of the law's requirements to get final approval, including offering coverage for individuals, and hiring so-called navigators to help consumers make decisions about what coverage to buy.

HHS expects a progress report from the state no later than Feb. 1.

Utah's approval could prove fleeting. Herbert's office released a statement that appeared to give no ground.

"Utah's position on our state health exchange has not changed and it will not change," said Ally Isom, deputy chief of staff for the governor. "Because it's consumer-driven, market-based and flexible, Utah's model is the right solution for Utah. Of course we'll review the HHS announcement and determine if the conditions are acceptable or reasonable for our state exchange—and that includes sitting down with legislators—but there is nothing about Utah's path that changes as a result of today's announcement."

The insurance exchanges are scheduled to open for enrollment Oct. 1 with coverage beginning January 2014. The exchanges are a key way the federal health law will extend health insurance coverage to as many 30 million people starting next year.

All told, the administration has approved the applications for state-run exchanges in 17 states and the District of Columbia.

Besides Utah, officials announced Thursday they had given approval to state-run insurance exchanges in California, Hawaii, Idaho, Nevada, New Mexico, Vermont. Previous approvals had been given to Colorado, Connecticut, the District of Columbia, Kentucky, Minnesota, Maryland, Massachusetts, New York, Oregon, Rhode Island and Washington.

The latest tally means the majority of states will have exchanges run entirely or partly by the federal government. The law requires the feds government to step in if states fail to set up exchanges.

"States across the country are working to implement the health care law and build a marketplace that works for their residents," Sebelius said in a statement. "In ten months, consumers in all fifty states will have access to a new marketplace where they will be able to easily purchase affordable, high quality health insurance plans, and today's guidance will provide the information states need to guide their continued work."

States had until Dec.14 to apply to run a state exchange and have until Feb. 15 to apply to run one in partnership with the federal government.

HHS also announced that it approved state-federal partnership exchanges in Arkansas and Delaware.

Cohen noted that Mississippi's application to start its own exchange is also still pending. He said the agency hasn't decided how to handle it because it is unclear if the state insurance commissioner who made the application has the authority to move forward in the face of opposition from Gov. Phil Bryant.